Cash Flows from Operating Activities-Direct Method The income statement of Booker T Industries Inc. for the current year ended June 30 is as follows: Sales $508,370 288,660 Cost of merchandise sold $219,710 Gross profit Operating expenses: Depreciation expense Other operating expenses Total operating expenses $39,010 103,130 Income before income tax Income tax expense 142,140 $77,570 21,520 $56,050 Net income Changes in the balances of selected accounts from the beginning to the end of the current year are as follows: Increase/ Decrease Accounts receivable (net) $11,270* Inventories 3,920 Prepaid expenses 3,760* Accounts payable (merchandise creditors) 8,020* Accrued expenses payable (operating expenses) 1,120 Income tax payable 2,690 Drenare the Cash Flows from Prepare the Cash Flows from Operating Activities section of the statement of ecreases in cash, or any negative adjustments. Booker I Industries Inc. Cash Flows from Operating Activities Section For the year ended on June 30 Cash flows from operating activities: Cash received from customers $ Cash payments for merchandise Cash payments for operating expenses Cash payments for income taxes Net cash flow from operating activities b. What does the direct method show about a company's cash flows from operati With the direct method the cash received less the cash payments